Finance minister confident in exiting grey list as FATF completes onsite review

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A team from the Financial Action Task Force (FATF) has completed onsite assessment on Mongolia’s anti-money laundering and counter terrorism financing (AML/ CTF) system ahead of its virtual plenary meeting from October 21 to 23.

Mongolia slipped back on FATF’s watch list, commonly referred to as the “grey list”, on October 15, 2019 due to strategic AML/ CTF deficiencies. The aftermath of the grey-listing wasn’t as harsh as most people expected but it revealed the underlying issues in the system that needed to be addressed, including urgent improvement to the supervision of real estate, cash inflow, and prosecution and investigation of financial crimes.

The government approached the issue head on and after months of endeavor, it managed to satisfy all six recommendations the intergovernmental organization gave to leave the grey list during Asia/Pacific Group on Money Laundering’s meeting on May 4, according to officials. By late May, Minister of Finance Ch.Khurelbaatar publicly expressed assertion in exiting the grey list before the end of the year. He backed it up with a citation from the FATF Secretariat’s report summary, which confirmed that Mongolia had fulfilled the six recommendation and addressed the deficiencies that put the country on the watch list.

A FATF team visited Mongolia and completed the last part of the assessment, an onsite review, on October 2 amid the global COVID-19 pandemic. They interviewed over 140 people to check the authenticity of Mongolia’s follow up report and verify their results.

On Saturday, Minister Ch.Khurelbaatar posted on his Facebook account, “The onsite visit required to exit the ‘grey list’ finished last night. The team met with over 140 people, including representatives from 22 government organizations, 19 entities, and four professional associations and private businesses.”

He thanked all organizations and professional bodies that assisted in fulfilling FATF’s recommendation, including Mongol Bank, General Prosecutor’s Office, Supreme Court, Financial Regulatory Commission, Counter Terrorism Council, Financial Information Department, Ministry of Finance, Ministry of Justice and Internal Affairs, Ministry of Foreign Affairs, General Intelligence Agency, and General Police Department.

At the end of this post, he stressed, “I’m certain that Mongolia will get off of the grey list soon.”

From professional associations, the FATF team interviewed representatives from the Mongolian Gold Producers’ Association, Mongolian Institute of Certified Public Accountants, Mongolian Bar Association and Chamber of Notaries of Mongolia.

Business representatives included Khan Bank, Golomt Bank, LendMN, Transport Development Bank, Transcapital, National Life Daatgal, Tenger Daatgal, Diamond House Store, Deloitte Audit, and Minter Ellison Lawyers to name a few.

Since its 2017 Mutual Evaluation and ensuing 2019 Follow-Up Report, Mongolia has made significant progress toward overcoming deficiencies on technical compliance under R.14, R.28 and R.35, according to the third Mutual Evaluation Follow-Up Report of Mongolia, published in August 2020.

• Recommendation 14 was re-rated from “Partially Compliant” to “Compliant”

• Recommendation 28 was re-rated from “Partially Compliant” to “Largely Compliant”

• Recommendation 35 was re-rated from “Partially Compliant” to “Largely Compliant”

The only setback was on Recommendation 15, which was amended after the mutual evaluation report and follow-up report were adopted. The publication said that Mongolia does not meet the updated FATF standards on virtual assets and virtual asset service providers, causing them to be re-rated from “Largely Compliant” to “Partially Compliant”.

When asked about Mongolia’s AML/ CTF progress, President of Mongol Bank B.Lkhagvasuren stated, “FATF gave Mongolia six recommendations on strengthening its AML/CTF system. Three of them were satisfied in January and the remaining three in April. In other words, all six were met last April. FATF organizes onsite assessment in accordance with its internal regulations but the pandemic made it uncertain whether they could complete it this year. After repeated requests from Mongolia, FATF decided to come to Mongolia. Overall, the organization is holding two onsite reviews this year and one of them is in Mongolia.”

Whether Mongolia manages to escape the grey list again will depend on the outcome of the onsite assessment, which will be shared at the Virtual Meeting of FATF, set to take place between October 21 and 23.

B.Lkhagvasuren advised the government and relevant agencies to take consistent action to fight against money laundering and terrorism financing if the country succeeds in getting rid of the “grey list” tag.

“With 40 recommendations, FATF examines and provides a comprehensive plan of action to ensure international standards for combating money laundering and terrorist financing and 11 special recommendations are provided to review actions taken by countries. If countries fail to consistently implement its actions, they will fail the assessment. A FATF team will come and review our AML/CTF system again in 2023 in conformity with the 40+11 recommendations. Therefore, we must have a fixed system structure,” he said.

“We have created this system, which currently fulfills 37 out of 40 technical recommendations and partially fulfills the remaining three. By 2023, we should be fully compliant with these three recommendations while staying compliant with the 11 action recommendations. Just like how we develop habits by repeating the same action every day, we should regularly take AML/CTF action and that way, we would never slip back to the grey list ever again.”

Dulguun Bayarsaikhan